by Tim Brady
, Business Editor
Returning to the basics of business can help you through difficult times
It’s inevitable that crises will arise from time to time in any business—and trucking is no exception. As a business owner, how you react and handle an unscheduled crisis will determine how quickly you get it resolved.
Let’s take a look at what not to do in a crisis.
Don’t substantially increase the number of loads without the trucks and drivers to handle them. Running out of loads can cripple your business, but so can the increased cost of trying to play catch-up by obtaining trucks and trailers, hiring, and training new drivers. There are times and places to grow, but during an emergency or crisis is not one of them. Have a preset load-to-truck ratio based on your current capacity of trucks and drivers. Make sure it fits the likely demand of your current customer base with anticipated increases and decreases in available loads.
Don’t dramatically increase your total number of new shippers in a crisis.
Taking on too many new customers during a crisis adds to the complexity of challenges your operation faces. Too many new shippers with too many demands that are different from those of your current customers can put an unnecessary strain on sales, operations, and your drivers. With that said, however, if you’re largely dependent on one shipper or broker for the vast majority of your loads, then you need to establish at least one or two other sources.
If you currently have a customer who represents over 30% of your total loads, you’re already headed for a crisis. If this shipper coughs, your operation will get the flu. If your shipper gets the flu, it could be potentially terminal for your trucking company. You need to be prospecting for additional shippers or brokers immediately.
Don’t put your trucking operation on steroids. Again, this is about not going overboard and overreacting to the crisis. The best way through a crisis is to come back to the basics of business. Think lean, control costs, and create revenue without substantially increasing costs. Use the KISS (Keep It Super Simple) principle when assessing the situation. Make lateral moves not growth. Look at reducing current risks not increasing liability with new ones.
Don’t bring loads in-house. If you’re using lease operators, sometimes your operation risks service interruption, but bringing those functions in-house and having to add trucks and company drivers in an emergency can create higher costs and even greater risks to your operation at a fragile time.
Instead of bringing loads back in-house, create backup sources to haul loads, possibly working with another even smaller carrier or a power-only drive-away carrier to fill the voids. Establish these relationships well in advance of need, so you can make one call in an emergency. Any load that made sense to outsource before a crisis hits still makes sense to outsource; just find a better way.[[300x250AD]]
If you currently aren’t utilizing lease operators, then jumping into the owner-operator contracting arena in a crisis is not a good plan either. If you’ve used strictly company employee drivers to this point, look into utilizing a power-only carrier to pull your loaded trailers.
Don’t change for the sake of change. Successful small and micro motor carriers are great at adapting. Flexibility is one of the great attributes of being small. Successful trucking company owners are quick to embrace change. But only change your business model based on logic and foresight. Don’t react just because you think you need to “do something.” Other than taking steps to overcome the short-term challenge, sometimes the best response to a crisis is actually no response.
Don’t ignore the increasing costs during a crisis. This is a very dangerous road to go down. While there may be a temporary spike in costs while dealing with a crisis, it’s extremely important to maintain control over all your costs. In fact, many times the best solution to a revenue or cost crisis is to do a line item cost analysis of each piece of equipment you own and operate. It’s an effective way to evaluate whether a piece of equipment is beneficial to revenue production or is becoming a money pit.
Don’t forget to prospect for new customers. Continual prospecting for new customers or looking to current shippers and brokers for additional loads should never be set on the backburner. Returning to the basics of business is always an excellent means of gaining control in a crisis, and prospecting for additional loads is one of those basics. Always have other loads and customers sitting in reserve, so if one of your current shippers burps or gets the flu, you can simply switch to one of the reserves and your crisis becomes a non-event.
What should you do after a business crisis? Take a hard look at your freight lanes and the strength of your customer base. Try to find potential weaknesses in your dispatching and load prospecting. Evaluate how you manage outsourced functions. Your goal is to look for glaring weaknesses, not to create new plans and systems that will mitigate every potential risk you could conceivably face.
By its nature, trucking is unpredictable, with minor crises occurring almost daily. There’s weather, breakdowns, unexpected personal events with employees and contractors, slipups in planning by shippers and receivers, and the fact that any truck traveling down the highway is a microsecond from the next emergency. The best first step in any crisis is to take a step back and make smart changes where necessary; otherwise, stay focused on what made your business successful in the first place.
Remember, trucking is a series of events with completion at the point of unload, with the next series of events beginning when your driver closes the doors on his empty trailer to head to the next pickup.
Trucking happens—and you’ll deal with it.
Contact Tim Brady at firstname.lastname@example.org or call 731-749-8567. Join Brady in the Trucking Business Community at www.truckersu.com.